Why Dragons’ Den investors put the brakes on RollerGard deal

Each week, Financial Post contributor Mary Teresa Bitti revisits CBC’s previous week’s episode of Dragons’ Den. She captures what the cameras didn’t and in the process provides a case study for readers, zeroing in on what pitchers and dragons were thinking and what the challenges for the deal are going forward.

The pitch Victor Posa spends a lot of time at hockey rinks. The former minor league hockey player who achieved his childhood dream of playing in the NHL when he hit the ice for two games as a Chicago Blackhawk is now a scout for the Phoenix Coyotes. His love of hockey and his experience as a player led him to his latest business venture: RollerGards.

Mr. Posa’s son Benito demonstrated the rolling hockey skate guards developed by Mr. Posa and his father-in-law Paul Steinhauser to a clearly impressed panel of dragons.

Mr. Steinhauser, a longtime inventor, hit on the idea of adding wheels to the bottom of skate guards in 2000. “My father-in-law is very innovative. He has a long history of making products better,” Mr. Posa said of Mr. Steinhauser who had a 42-year career at General Motors in its tool and dye department. “When he told me about the idea for RollerGards, I said let’s try it.”

Mr. Steinhauser made a prototype using an old, rubber skate guard. He initially tried attaching the wheels in a straight line underneath the guard but this design put skaters too high off the ground. He quickly moved on to Rollergard’s current four-wheel quad style configuration, making it not quite a roller skate nor an inline skate but a hybrid, with its own unique feeling of manoeuvrability, Mr. Posa said.

As they worked on the Rollergard, Mr. Steinhauser and Mr. Posa also began rethinking traditional skate guards, which, have seen little if any innovation since they were first introduced. Their design and patent for SuperGards provides the best blade edge protection. Unlike traditional skate guards, with SuperGards the blade floats in the guard, it does not touch the bottom. “All the pressure is on the holder, not the blade edge,” Mr. Posa said.

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“Our guards also feature drainage holes, so no moisture is trapped inside which means no rust. They are also wider and have serrated bottoms for better traction and stability. All these incremental details make SuperGards an all-terrain walking skate guard. You can walk through snow and go straight to the pond or the rink in your backyard and they won’t slip off.”

RollerGard and SuperGard hit store shelves in October 2010. “I approached pro shops and specialty stores and distributors to prove to people these are quality products.” It worked. The RollerGards in particular were an instant hit and sold out. “Kids from 4 to 14 love the RollerGards. They are quality indoor/outdoor wheels and kids are rolling around on driveways breaking in their new skates and having a ball,” Mr. Posa said.

When he entered the Den, the products were in 100-plus stores across Canada and the U.S. retailing at $59.99 for the RollerGard and $14.95 for the SuperGard. Sales had hit $300,000.

The deal Mr. Posa asked for $200,000 in exchange for a 20% stake. He accepted a deal offered by Jim Treliving, Bruce Croxon, David Chilton and Arlene Dickinson for $200,000 in exchange for 30% in the business plus a 5% royalty on sales of more than $1-million. The deal did not make it through due diligence, although Mr. Treliving is still interested and has left the door open for future discussions.

Meanwhile, Mr. Posa and his business partner brought in another investor, changed the packaging and are working with a new offshore supplier. “We are selling in Switzerland, Germany, France and we’re in talks with big box retailers in North America,” Mr. Posa said. “We’re getting ready to release a new product, a learn-to-skate guard also based on the SuperGard. It transforms the single blade into a double rudder and will retail for $24.99.”

A dragon’s point of view Jim Treliving loves the products but is concerned about RollerGards price point. “These are high quality products and work well. We tested them with NHL people and they are well constructed but when we approached the distributors, they weren’t as enthusiastic as we were,” he said.

“When you’re already paying $200 to $400 on a pair of skates, do you want to spend another $60 for RollerGards? That said, once people try it, they really like it. We continue to talk with the entrepreneurs and we’re leaving the door open. We know there is a market, we just don’t know how big it is and as investors, that’s a key question we need to answer.”

An expert’s opinion John Cho of KPMG Enterprise likes the versatility and convenience of the RollerGards and says the key in taking the business to the next level will be bigger distribution with mass market retailers. “Right now they are in a lot of independent and smaller retailers. If they can get into companies like SportChek and Canadian Tire, this will be a significant turning point. At the same time, this is a marketing play. They have to get the word out because once kids see this they’ll want it.”

While Mr. Cho does not think the price point is prohibitive for consumers, he said it may be for larger retailers. “The entrepreneur will have to find that delicate balance between price and volume if he does want to go more mass market.”

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By clicking "Create Account", I hearby grant permission to Postmedia to use my account information to create my account.

I also accept and agree to be bound by Postmedia's Terms and Conditions with respect to my use of the Site and I have read and understand Postmedia's Privacy Statement. I consent to the collection, use, maintenance, and disclosure of my information in accordance with the Postmedia's Privacy Policy.